The design of optimal education policies when individuals differ in inherited wealth and ability
AbstractIn this paper I consider the role of optimal education policies in redistribution when individuals differ in two aspects: ability and inherited wealth. I discuss the extent to which the rules that emerge in unidimensional settings apply also in the bidimensional setting considered in this paper. The main conclusion is that, subject to some qualifications, the same type of rules that determine optimal education policies when only ability heterogeneity is considered apply to the case where both parameters of heterogeneity are considered. This rules imply a widening of the education gap between high- and low-ability individuals in second-best with respect to the first-best gap. The qualifications regard the implementation of the optimal allocation of resources to education and not on the way the optimal allocation in first- and in second-best differ.
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Date of creation: 31 Jul 2007
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Optimal taxation; education; public provision; multidimensional screening;
Other versions of this item:
- Darío Maldonado, 2007. "The Design Of Optimal Education Policies When Individuals Differ In Inheritedwealth And Ability," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
- I28 - Health, Education, and Welfare - - Education - - - Government Policy
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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